Map of seven Independent System Operators (ISOs) making up the Regional Transmission Organizations (RTOs). From FERC

While the auctions held by RTO/ISOs only cover part of the United States, they account for supplying electricity to nearly two-thirds of the population.

It’s also true that the dispatch system used by RTO/ISOs is complicated. The system includes real-time auctions, day-ahead auctions and capacity auctions, where the rules can vary between RTO/ISOs.

It’s no wonder most Americans have little comprehension about how the price of electricity is set. And why the proponents of wind and solar can get away with blatantly misleading statements.

At the core of the problem is that the auction price submitted by utilities for each bid is the lowest variable cost.

The lowest variable cost will virtually always be from wind or solar plants because they have no fuel costs.

This results in wind and solar being selected over electricity supplied by coal, natural gas or nuclear power plants whenever wind or solar generated electricity is available.

But, the lowest variable cost does not include the cost of building the power plant or other fixed costs.

The preferential dispatch auction system used by RTO/ISOs is destructive because it results in the closure of fossil fuel and nuclear power plants. See, Why Are We Destroying Our Grid?

If allowed to continue, it will result in inadequate supplies of electricity when wind and solar become major suppliers of electricity, because nuclear, coal-fired, and eventually, natural gas power plants will have been closed.

Power plants can’t survive, and new ones can’t be built if they cannot recover their fixed costs.

This is a fact that the proponents of wind and solar ignore when they make statements supporting wind and solar while calling coal-fired, nuclear and natural gas power plants economically uncompetitive.

Wind and solar are more expensive and, in addition, are unreliable.

Americans need to understand that the dispatch system used by RTO/ISOs is rigged to favor wind and solar.

As a result, nuclear and coal-fired power plants are being closed. Once a nuclear plant is closed, it will never be restarted.